Antonin Scalia

Donald Perón Versus Evita Clinton

Por Alejandro Chafuen: Publicado el 6/6/16 en: http://www.forbes.com/sites/alejandrochafuen/2016/06/06/donald-peron-versus-evita-clinton/#3a480a2951eb

Five years ago, the two candidates headed for the final round of the presidential election in Peru raised fears among friends of the free society. Nobel Laureate Mario Vargas Llosa stated that choosing between them was like choosing whether to die from HIV or cancer. Ollanta Humala, winner of the contested presidential election, is about to finish his mandate, and widespread fears did not materialize. Peru did not die. In fact, several of Vargas Llosa’s allies ended up joining President Humala’s administration.

Similar fears permeate in the United States today, especially among those who understand and cherish the essential aspects of the American dream. Pundits have sought to compare this country’s political situation with recent Argentine history. For instance, a recent article by Bill Kristol, entitled “The United States of Argentina?” warns that any of the frontrunners (including Bernie Sanders) would turn the United States in an “Argentina.” This comment has not been exclusive to pundits; in a CNBC interview, Donald Trump himself cautioned voters that if he does not win, the United States would turn into an “Argentina or a Venezuela.”

When people mention “Argentina” in negative terms, they are not referencing the country that, from 1853 to the 1940s, experienced record development. This period of growth began with the adoption of a constitution that respected life, liberty and the pursuit of happiness and established strong protections to private property. Thanks to this constitution, Argentina attracted scores of immigrants from Europe. Despite harboring many contradictions and weaknesses, that era is often remembered as the “Argentine miracle.”

The beginning of Argentina’s decay is rightly associated with the rise of Juan Domingo Perón (1895-1974). Perón became a leading political figure and president from 1946 until 1955, after a 30 year career in the military. In a previous Forbes article I described how he implemented many of the policies of Fascist Italy in Argentina. At his side, Perón had his charismatic wife, Evita Perón (1919-1952). Both Juan Domingo Perón and Evita are still widely revered in Argentina. If friends of liberty are concerned about the Argentinization of the United States, they should look closely at the doctrines and actions of Juan Domingo and Evita Perón. What, if anything, do Donald Trump and Hillary Clinton have in common with the Perón’s personalities and policies?

Republican presidential candidate Donald Trump (JOSH EDELSON/AFP/Getty Images)

The Times of London once described Juan Domingo Perón as “well-loved and well-hated dynamic, dashing, picturesque, colorful, and often reckless. … Argentina’s most vivid person” (Feb 23, 1946); these descriptors could also be applied to Donald Trump. Like Perón, Trump’s background includes the military; he attended the New York Military Academy for high school and then the University of Pennsylvania. Peron’s 30 years in active military service left a much deeper mark in his character and methods, as did his studies of German and Italian armed forces and political strategy.

Evita, in turn, was described by historian David Rock as “this dynamic, captivating, magnetic, but also mercurial and vindictive woman [who] wielded power that was never defined nor formalized, and which was therefore often unchecked and unlimited.” The description fits more Hillary as first lady than in her later, more defined and formal career in government.

Perón’s first political party was the Labor “Workers” Party, which counted on support from labor unions. It soon became part of the Justicialista Party, the “social justice” party founded by Perón. Donald Trump’s call for turning the Republican Party into a worker’s party gave ammunition to those who compare him with Perón. But strong labor union support was the backbone of Peronism. In terms of support (financial and otherwise) from labor unions, Hillary is the most Peronist candidate. Peronist focus on a statist and redistributionist conception of social justice also resembles the tone of the ideals championed by Hillary Clinton. Juan and Evita Perón pushed for the growth of the welfare state; their goals were similar to those proposed in 1942 by Lord Beveridge (1879-1963) in the U.K. Hillary Clinton’s policies are much more aligned with a welfare state ideology than Trump’s; Trump shuns most ideologies. Take healthcare: In 1946, soon after winning the presidency, Perón pushed for the semi-socialization of the healthcare system.

That’s not to say that Hillary is similar to Evita on all fronts. Evita Perón championed voting rights for women, but chided traditional feminists. She frequently attacked socialists and communists, and on many occasions invoked Christianity and its sacred symbols into her speeches. Evita played an adulatory role for her husband; she once stated that Perón resembled those geniuses “who created new philosophies and new religions. I will not commit the heresy of comparing him with Christ . . . but I am sure that, imitating Christ, Perón feels a profound love for humanity, and that it is this, more than any other thing, which makes him great, magnificently great.” Evita encouraged all to call her husband “Our Leader.” Although Trump’s wife Melania, has stressed his leadership qualities, I doubt that she, or anyone else will refer to Trump as “our leader.”

Democratic presidential candidate Hillary Clinton (GABRIELLE LURIE/AFP/Getty Images)

In “charitable” activities, Hillary seems much more “Peronist.” Evita, like Clinton, also had her name on a foundation. Evita’s foundation was created by a government decree and supported by government schemes and private gifts. The numerous handouts and free services offered helped enhance her image and securing for herself the unofficial title of “Spiritual Chief of the Nation.” At its peak (in 1951),Fundación Eva Perón had a budget equivalent to 0.6% of Argentina’s GDP. It was understood that if you wanted to do business in Argentina, you had to donate to her foundation. Trump has yet to occupy political office, so he has more experience in how to “buy” than sell access to politicians.

Perón championed rent control, which caused tremendous damage to the Argentinean housing market. There is nothing in Donald Trump’s DNA that would make him push for rent control. Hillary’s plan for affordable housing is based on increased subsidies rather than rent control, but as it plans to subsidize both demand and supply, it will likely increase dependence on government, a typical Peronist outcome and strategy.

In the arena of foreign policy, it’s hard to compare Perón’s Argentina with the United States. Perón championed a “third-way” between communism and capitalism; he gave coverage to the Nazis, but did not engage the country in any war. Hillary has voted for wars; Trump has yet to have a chance.

Few expect that during a Trump or Clinton presidency, the U.S. dollar would lose as much value as the Argentine peso did during Perón’s government. When Perón assumed power in 1946, Argentines needed just over 4 pesos to buy one US dollar. By the time Perón was ousted in 1955, they needed 27. The destruction of sound money of Argentina started soon after the creation of the Central Bank in 1935; Perón turned the bank into a tool for cronyism, and it remained so for most of its history. Trump has criticized currency manipulation, while Hillary has been a willing accomplice of the Fed and its cronies. In a recent piece “Trump’s Problem with the Fed,” sound money champion Judy Shelton quoted Trump as saying, “Bringing back the gold standard would be very hard to do — but boy, would it be wonderful. We’d have a standard on which to base our money.”

In fiscal terms, Perón more than doubled the deficits which went from less than 1% in the previous decade, to 2.5% during his tenure. Government spending in relation to GDP during Perón’s government averaged 11%. It is already double that in the U.S. and both parties are guilty. Hillary has said that if she wins, Bill Clinton will be having an important role in economic policy. Will he repeat his “the era of Big Government is Over?” Does Trump’s supply-side approach indicate that he is a champion of smaller government? It’s hard to say, and this uncertainty continues to have negative effect on the prospects of the U.S. economy.

Argentina’s decline was not solely in the field of economics.Transparency International ranks the country 107 among 168 in corruption. One of Perón’s first acts upon assuming the presidency was to impeach five Supreme Court Justices. Towards the end of his dictatorship, he stated: “No justice to the enemy.” He recommended that the courts should rule using the arguments found in the books on the “Peronist side of the library.” I was recently at a meeting where Trump stated to a crowd of conservative leaders that we needed more people like Clarence Thomas in the courts. His praise for the late Antonin Scalia, and his list of potential nominees makes it a reasonable bet that Hillary’s appointments to the court will be more “Peronist” than Trump’s.

It would be a sad turn of events if the United States succumbs more to “Peronism” at a time when a new Argentinean government is struggling to abandon Peronism’s worst features. The lethal Peronist cocktail that destroyed Argentina requires a strong combination of statist and nationalist policies. Trump wins on nationalism; Hillary wins hands down on statism. Luckily, neither is extreme in combining both.

I see little chance that voters in the United States would put either Trump or Hillary on a pedestal like Argentines did with Juan Domingo Perón and the equally charismatic Evita. As I think my analysis above has shown, there’s a chance that despite not falling completely for a cult of leadership, voters might continue to fall into the trap of supporting the cult of top-down government policies that led to Argentina’s staggering decline.

Alejandro A. Chafuén es Dr. En Economía por el International College de California. Licenciado en Economía, (UCA), es miembro del comité de consejeros para The Center for Vision & Values, fideicomisario del Grove City College, y presidente de la Atlas Economic Research Foundation. Se ha desempeñado como fideicomisario del Fraser Institute desde 1991. Fue profesor de ESEADE.

Argentine Ruling Rocks The Sovereign Debt Market

Por Alejandro A. Chafuén. Publicado el 2/7/14 en: http://www.forbes.com/sites/alejandrochafuen/2014/07/02/argentine-ruling-rocks-the-sovereign-debt-market/

The recent decision by the U.S. Supreme Court to let stand a ruling by New York District Court Judge Thomas Griesa could have a major impact in the world economic scene. The ruling favors Argentine creditors and it requires the Argentine government to pay the debt owed to bond holders who did not agree to the terms offered in a previous partial settlements (the “holdouts”). The continued effort of the Argentine government to fight the ruling is based on its lack of understanding of how independent courts operate.

Seven years ago, during a trip to Peru, I had the privilege of spending four days attending programs with Justice Antonin Scalia. It was the first time that a Supreme Court justice had gone to Peru. During his presentation, a panel discussion with some of the highest authorities of the Peruvian judiciary, Scalia said: “During my entire career as a federal judge and Supreme Court justice, which now spans 26 years, never once, never once was I was approached by someone from the executive or the legislative power to try to exert influence in a case that was before me in one of my courts.”

A journalist interviewed me at the end of Scalia’s visit and asked me what impressed me most about his lectures. I repeated the above story and the journalist said to me: “It must be difficult to find a man with the integrity of Scalia.” Sure, it is difficult to find human beings like Scalia, but the journalist mistakenly thought that the independence of the judiciary in the U.S. was a matter of one person, not an institutional trait. Peru’s judiciary is not noted for its independence.

The notion of an independent judiciary that would constrain the government is even rarer in Argentina. In the World Rule of Law Index, Argentina scores a dismal 0.35 out of 1 in the category: Limits to the Government by the Judiciary. Peru does not score much better, only 0.45, but is moving in the right direction.

As for most of its tenure, the Argentine government presided by Nestor and Cristina Kirchner saw a judiciary system mostly subservient to government interests. Because of this it is natural that they would think the U.S. courts could also be manipulated. The Argentine government and negotiators don’t understand that U.S. federal courts are still independent. The politicization of the nomination process in the U.S. has not lead to the direct manipulation of the highest courts.

A few weeks ago, before the ruling, and as a last ditch effort, the Argentine government sent a delegation to lobby the Obama administration and theWashington-based international bureaucracies. They asked them to “intervene” on behalf of the Argentine government. It proved futile. After the ruling, which recognized the rights of the creditors, the first official response from the Argentine government was to publish a one page advertisement in the Wall Street Journal attacking the decision of the judge.

Other countries are watching this battle. In Peru there is more willingness to play by the rules. José Luís Sardón, one of the main hosts of Scalia’s trips to Peru, spent most of his academic life as an intellectual entrepreneur in the area of law. His law department, at the Universidad Peruana de Ciencias Aplicadas, has acted as a high-level, non-politicized legal think tank. Sardón produced a journal, Revista de Economía y Derecho, which has been elevating the discourse on legal and juridical matters in his country. Unlike the Argentines, who were recently greeted with “bad” news, Peruvians were greeted with the refreshing news that the Peruvian Congress had approved the appointment of Sardón to the highest court of the land.

The end result of the Argentine debt dispute is not certain. Agustín Etchebarne, executive director of Libertad y Progreso in Argentina, and with ample experience in the investment world, believes that, in the end, Argentina will negotiate with the holdouts. The clock started ticking, and if it does not reach an agreement by the end of July, it will likely default. Complying with the law might not be as costly as the Argentine government assumes. The latter fear that if they offer a better deal to the holdouts, the deal has to be offered to the 92 percent who have agreed to worse terms. Etchebarne believes that since the government is not offering to pay, rather it is being forced to pay, that “it is not clear that judges will rule in favor of the other creditors.”

Steve Hanke, a senior fellow at the Cato Institute, and a professor at Johns Hopkins University, stressed that Argentina needs to create a positive shock. Complying with the ruling should reduce the country’s risk and send signals to the world that Argentina is again open to true, not just crony, business. Etchebarne adds that from the energy to the agricultural sectors, and many others, there are abundant opportunities for investments in Argentina. Complying with the ruling might benefit the development of a healthier Argentinean economy in the near future.

Although it is hard to be optimistic about Argentina, the future of countries are not sealed. During the late 1980s, respected Latin American analysts were forecasting the disintegration of Peru as a nation. There is still much to improve in Peru but its country default risk runs today at 1.3 percent compared to 14.6 percent for Argentina.

The Argentine government might portray the hedge fund owners that represent most of the holdouts as greedy vultures, but few have been more voracious than the Argentine government authorities. They have speculated that their use of their arbitrary powers will allow them to continue with their practices with almost total impunity. It is the poor of Argentina who have paid the price for government policies that have taken their country to the lower places in the rule of law rankings. If the Argentine political and media pressure would have been able to sway a U.S. federal court it would have set an awful precedent and would have unleashed an increase of similar practices by other countries. On the other hand, the Supreme Court’s decision to let stand Judge Griesa’s ruling will make it more difficult for other countries to restructure its debts in an arbitrary and unjust manner. It should also lead to an improvement of the legal frameworks governing defaults by sovereign countries.

Tear Down This Wall: Celebrating Victories Over Communism On World Freedom Day

Por Alejandro A. Chafuén. Publicado el 6/11/13 en: http://www.forbes.com/sites/alejandrochafuen/2013/11/06/tear-down-this-wall-celebrating-victories-over-communism-on-world-freedom-day/

Saturday, Nov. 9, marks the 24th anniversary of the fall of the Berlin Wall. It is an important date in the history of human civilization. President Ronald Reagan’s demand, “President Gorbachev, tear down this wall,” constitute some of the most memorable words spoken in the last century. Reagan and Mikhail Gorbachev were not the only two actors in this human drama. Many died confronting Soviet expansionism in the Southern cone of the Americas, in Angola, Afghanistan, and other corners of the globe.

A political leader and a think tank scholar deserve major credit for highlighting the importance of this date.

José María Aznar, former prime minister of Spain, has always been committed to freedom. Several years prior to his 1996 election, he created a think tank, FAES, to help disseminate the ideas of liberty.

Aznar had been so helpful with efforts around the globe that in early 2004 I asked a member of his team, Alberto Carnero, former national security advisor and current ambassador in Austria, if Aznar had a favorite issue that I could help support. Carnero told me, “He would like to celebrate with more emphasis the victories over communism, especially Nov. 9.” A few months after, another Spanish think tank leader, Vicente Boceta, past executive director of the Business Roundtable of Madrid (Circulo de Empresarios de Madrid), contacted me with the same goal. He was not aware of Aznar’s request.

Neither of my Spanish friends knew that they were preceded by Arnold Beichman, an admirable scholar who, like other luminaries, was working at the Hoover Institution. He was 85 years old during those liberating days of 1989. A native of Ukraine, and longtime educator and activist against communism, Beichman successfully encouraged President George W. Bush to proclaim Nov. 9 asWorld Freedom Day. Beichman was very active among think tanks. He was one of the founders of the Consortium for the Study of Intelligence, in Washington D.C. (with, among others, Antonin Scalia, Samuel Huntington, James Q. Wilson, and Bob Pfaltzgraff) and the former vice president of the Philadelphia Society.

Like my friends above, there are many worthy players who confronted the evils of communism that deserve to be recognized, but there is also a utilitarian argument for commemorating World Freedom Day. As George Santayana wrote, “those who cannot remember the past are condemned to repeat it.” Today, many young Germans do not have a vivid recollection of those last days of communism.

In addition to remembering those who contributed to the weakening of the Soviet Union and helped to strengthen the free society, Nov. 9 is an ideal day to take stock. One of the first measurements of freedom, developed by Freedom House in 1973, has focused on political aspects of freedom. At the time of the fall of the Berlin Wall, Freedom House listed 68 countries that lacked democratic freedom; today we are down to 47. Measurements of economic freedom began just after 1989.

In recent decades, progress in economic freedom has not been great. The Heritage-Wall Street Journal index rates world economic freedom at 5.96 out of 10 in 2013 as compared to 5.76 in 1995, the year of its first ranking. The Fraser Institute index shows a similar slow progress of 6.87 in 2011 compared to 6.38 in 1995. Around the time of the fall of the Berlin Wall, Fraser calculated world economic freedom at 5.82. The United States, however, scores worse today than it did 1989.

Ronald Reagan’s statement that, “freedom is never more than one generation away from extinction,” is clearly a call to action. The fight for freedom needs to go beyond economics. On the field of research, LIBRE, a budding think tank in Argentina, is seeking support to compile a “Black Book of Terrorism” to complement the influential 1999 Harvard University Press book “The Black Book of Communism,” a multi-author work that listed 100 million (dead) victims of communism. Organizations such as The Victims of Communism Memorial Foundation (run by Lee Edwards), which focuses on remembering the victims, and The Human Rights Foundation which defends current victims of totalitarian governments, also deserve strong support.

Nov. 9 is not all about the past. North Korea and Cuba are still under the grip of communism. The citizens of many other countries, especially those with rulers trying to implement 21st century socialism and other totalitarian models, are also longing to celebrate their own freedom day. Thanks to the encouragement of President Aznar and the late Arnold Beichman, think tanks across the globe keep this day in their agenda. More than that, by continuing to document, advocate, and defend the treasure of liberty, they make a positive contribution to civilized life.